<PAGE>1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-11580
PHARMAKINETICS LABORATORIES, INC.
(Exact name of registrant as specified in its charter)
Maryland 52-1067519
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
302 West Fayette Street
Baltimore, Maryland 21201
(Address of principal executive offices)
(410) 385-4500
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes _X_ No ___
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court. Yes _X_ No ___
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date. 2,442,754
common shares were outstanding as of May 6, 1998.
</PAGE>
<PAGE>2
PHARMAKINETICS LABORATORIES, INC.
FORM 10-Q
INDEX
Page No.
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Statements of Operations for the three 3
and nine months ended March 31, 1998
and 1997 (unaudited)
Balance Sheets at March 31, 1998 4
(unaudited) and June 30, 1997
Statements of Cash Flows for the 5
nine months ended March 31, 1998
and 1997 (unaudited)
Notes to Financial Statements (unaudited) 6
Item 2. Management's Discussion and Analysis of 8
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds 11
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
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</PAGE>
<PAGE>3
PHARMAKINETICS LABORATORIES, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues $2,722,535 $2,347,072 $9,509,555 $7,039,333
Cost of contracts 2,317,954 1,780,126 7,029,898 5,190,987
---------- ---------- ---------- ----------
Gross profit 404,581 566,946 2,479,657 1,848,346
Selling, general and
administrative expenses 493,450 487,489 1,724,230 1,551,668
Research and
development expenses 140,226 106,667 382,516 321,307
---------- ---------- ---------- ----------
Earnings (loss) from operations (229,095) (27,210) 372,911 (24,629)
Interest expense (29,252) (43,921) (120,039) (141,272)
Interest income 60,611 7,637 93,765 24,130
---------- ---------- ---------- ----------
Earnings (loss)
before income taxes (197,736) (63,494) 346,637 (141,771)
Income taxes - - - -
---------- ---------- ---------- ----------
Net earnings (loss) (197,736) (63,494) 346,637 (141,771)
Accretion of
preferred stock dividend - - (1,020,793) -
---------- ---------- ---------- ----------
Net loss applicable
to common stockholders (197,736) (63,494) (674,156) (141,771)
========== ========== ========== ==========
Basic loss per share ($0.08) ($0.03) ($0.28) ($0.06)
========== ========== ========== ==========
Diluted loss per share ($0.08) ($0.03) ($0.28) ($0.06)
========== ========== ========== ==========
Basic and diluted weighted
average shares outstanding 2,440,342 2,439,129 2,439,527 2,439,129
========== ========== ========== ==========
</TABLE>
-3-
</PAGE>
<PAGE>4
PHARMAKINETICS LABORATORIES, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, June 30,
1998 1997
------------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and equivalents $ 3,904,106 $ 556,040
Accounts receivable, net 1,251,721 1,014,538
Contracts in process 562,670 503,163
Prepaid expenses 245,660 190,343
------------ ------------
Total Current Assets 5,964,157 2,264,084
Property, plant and equipment, net 3,881,531 3,654,132
Other assets 93,933 40,516
------------ ------------
Total Assets $ 9,939,621 $ 5,958,732
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ - $ 206,588
Accounts payable and accrued expenses 1,061,423 912,686
Deposits on contracts in process 1,080,560 862,272
------------ ------------
Total Current Liabilities 2,141,983 1,981,546
Other liabilities 258,886 38,714
Long-term debt - 1,500,231
------------ ------------
Total Liabilities 2,400,869 3,520,491
------------ ------------
Commitments and Contingencies
Stockholders' Equity:
Class A Convertible Preferred stock, no
par value; authorized 1,500,000 shares;
issued and outstanding 833,300 shares 4,937,500 -
Common stock. $.005 par value; authorized,
10,000,000 shares; issued and
outstanding, 2,442,654 and 2,439,129
shares, respectively 12,213 12,196
Additional paid-in capital 11,830,058 12,013,701
Accumulated deficit (9,241,019) (9,587,656)
------------ ------------
Total Stockholders' Equity 7,538,752 2,438,241
------------ ------------
Total Liabilities and Stockholders' Equity $ 9,939,621 $ 5,958,732
============ ============
</TABLE>
</PAGE> -4-
<PAGE>5
PHARMAKINETICS LABORATORIES, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
-------------------------
1998 1997
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 346,637 $ (141,771)
Adjustments to reconcile net earnings (loss) to
net cash provided by operating activities:
Depreciation and amortization 395,616 340,818
Changes in operating assets and liabilities:
Accounts receivable, net (237,183) 506,545
Contracts in process (59,507) (211,619)
Prepaid expenses and other assets (108,734) (46,684)
Accounts payable and accrued expenses 132,441 (275,901)
Deposits on contracts in process 218,288 405,221
------------ -----------
Net cash provided by operating activities 687,558 576,609
------------ -----------
Cash flows from investing activities:
Payment for purchases of property and equipment (282,850) (161,759)
------------ -----------
Net cash used by investing activities (282,850) (161,759)
------------ -----------
Cash flows from financing activities:
Proceeds from issuance of preferred stock, net 4,683,387 -
Proceeds from issuance of warrants 62,500 -
Payments for capital lease obligations (103,698) (224,748)
Payments on long-term debt (1,706,819) (104,986)
Proceeds from exercise of stock options 7,988 -
------------ -----------
Net cash provided (used) by financing activities 2,943,358 (329,734)
------------ -----------
Increase in cash and equivalents 3,348,066 85,116
Cash and equivalents, beginning of period 556,040 990,401
------------ -----------
Cash and equivalents, end of period $ 3,904,106 $ 1,075,517
============ ===========
Supplemental Cash Flow Information:
Non-Cash Transactions:
Fixed assets acquired through capital leases $ 340,165 $ 53,840
Accretion of preferred stock dividend $ 1,020,793 $ -
Cash Paid for Interest: $ 123,654 $ 136,837
Cash Paid for Income Taxes: $ - $ 5,800
</TABLE>
</PAGE> -5-
<PAGE>6
PHARMAKINETICS LABORATORIES, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
BASIS OF PRESENTATION
The statements of operations for the three and nine months ended
March 31, 1998 and 1997, the balance sheet as of March 31, 1998,
and the statements of cash flows for the nine months ended March 31,
1998 and 1997, have been prepared by the Company without audit. In the
opinion of management, all adjustments necessary to present fairly the
financial position, results of operations and cash flows at March 31,
1998, and for all periods presented, have been made. The balance sheet
at June 30, 1997 has been derived from the audited financial statements
as of that date. All financial information gives retroactive effect to
a change in the number of shares of authorized Common Stock to
10,000,000, an increase in par value to $0.005 per share, and a five-to-
one reverse stock split which was effective at the close of
business on April 17, 1998.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested
that these financial statements be read in conjunction with the financial
statements and notes thereto included in the Company's fiscal 1997 report
on Form 10-K.
The Company operates principally in one industry segment, the
testing of pharmaceutical products and related services. Revenues
include contract revenue and revenue from license fees under special
agreements whereby the Company receives license fees based upon the
clients' actual product sales.
ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual amounts could differ from these
estimates.
NEW ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128 regarding the
computation of earnings per share. This Statement requires the Company
-6-
</PAGE>
<PAGE>7
to present basic and diluted earnings per share in the financial
statements. The Company adopted the requirements of this Standard in the
financial statements for the quarter ended December 31, 1997. The
Company's Class A Convertible Preferred Stock, outstanding stock options
granted under the Company's stock option plans and other grants outside
of the Company's plans are considered common stock equivalents for the
purpose of the diluted earnings (loss) per share data; however, they are
excluded from the calculations for the three and nine month periods ended
March 31, 1998 and 1997 because the effect of their inclusion would be
anti-dilutive. All periods presented have been restated to conform to
the new standard.
STOCKHOLDERS' EQUITY
Private Placement
On December 23, 1997, the Company received the proceeds from the
sale to investors, including certain affiliates of Aster.Cephac and CAI
Advisors & Co. (collectively, the "Purchasers"), of 833,300 shares of a
newly created Class A Convertible Preferred Stock and warrants to
purchase 1,250,000 shares of the Company's Common Stock and entered into
a Registration Rights Agreement and Technology Sharing Agreement in
connection therewith. The securities were sold for an aggregate purchase
price of $5,000,000 in a private placement pursuant to a Preferred Share
and Warrant Purchase Agreement dated as of December 4, 1997. The
Purchasers beneficially own approximately 41% of the Company's voting
securities without giving effect to the possible exercise of the
warrants, or approximately 54% of the Company's voting securities if all
the warrants are exercised.
The Agreement provided for the sale to the Purchasers of a total of
833,300 shares of Class A Convertible Preferred Stock for $4,937,500, or
$5.925 per share (the "Preferred Stock"). The Preferred Stock is
convertible at any time into shares of Common Stock at a conversion ratio
of one share of Preferred Stock for two shares of Common Stock. The
conversion ratio is subject to adjustment under certain circumstances to
prevent dilution. In the event of the liquidation of the Company, the
holders of the shares of Preferred Stock who do not convert their shares
into Common Stock are entitled to receive $5.925 per share, prior to any
distributions being made to the holders of any other class or series of
the Company's capital stock.
In addition, the Agreement provided for the sale to the Purchasers,
for $62,500, of warrants to purchase 1,250,000 shares of Common Stock.
The warrants are fully exercisable at $6.00 per share and expire on
December 23, 2000. The warrants were not exercisable until the
Company filed with the Maryland State Department of Assessments and
Taxation an amendment of the Company's charter increasing the number of
authorized shares of common stock.
-7-
</PAGE>
<PAGE>8
Net earnings have been adjusted for the accretion of a preferred
stock dividend to the Purchasers, resulting in a net loss applicable to
common stockholders. The dividend was computed based on the excess of
the fair market value of the Company's Common Stock, into which the
Preferred Stock was convertible at the date of issue, over the purchase
price of the Preferred Stock. The dividend was recorded for financial
reporting purposes only and was not paid to the Preferred Stockholders.
Reverse Stock Split
On April 6, 1998, the Company's stockholders approved a five-to-one
reverse split of the Company's Common Stock, the change of authorized
shares of the Company's Common Stock to 10,000,000 shares, par value
$.005 per share, and the reduction of capital for payment of fractional
shares and amendment of the Company's Charter in connection therewith.
The reverse split, which became effective at the close of business on
April 17, 1998, did not affect the rights and privileges of holders of
Common Stock, either before or after the reverse split. The Company had
2,442,654 and 2,439,129 shares outstanding at March 31, 1998 and 1997,
respectively, giving effect to the reverse stock split as though it had
occurred as of each such date. The Company will not issue fractional
shares as a result of the split, and each fraction of a share will be
exchanged for cash. The Company's capital will be reduced by the amount
of cash paid for fractional shares, the total payment of which is
not expected to be material.
PART I.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The Company's revenues of $2,722,535 and $9,509,555 for the three
and nine month periods ended March 31, 1998 increased 16.0% and 35.1%,
respectively, from $2,347,072 and $7,039,333 for the same periods in the
prior year. Included in the Company's revenue is license fee income of
$74,639 and $588,698, for the three and nine month periods ended March
31, 1998, compared to $190,995 and $563,908, respectively, for the same
periods of the prior year. License fee income, based on clients' sales
of approved drugs, will continue through the expiration of the license
fee agreements, one of which expired in October 1997, and another of
which will expire in fiscal 2000. In addition, the Company began
receiving license fees in November 1996 under a third agreement with
another of its clients which received approval from the FDA to
manufacture and market Sucralfate Tablets. The client received approval
to market its drug in April 1996 and commenced sales in November 1996.
The Company expects to receive payments for a minimum of eight years from
the date of approval. License fee income from sales of this third
product accounted for the increase in license fee income during the nine
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</PAGE>
<PAGE>9
month period ended March 31, 1998, notwithstanding a decline in
license fee income from the other two license fee arrangements. The
Company believes it is unlikely that its clients will wish to utilize
license fee arrangements in the future as compensation for work
performed. As a result of this trend, contract revenues, rather than
licensing income, will continue to be the primary source of revenues.
The increase in the Company's revenues for the three and nine month
periods ended March 31, 1998, compared to the same periods in 1997,
resulted from the Company's progress in accomplishing its goals to
increase the amount of revenue generated from innovator pharmaceutical
and biotechnology companies, in addition to revenue generated from
contracts with generic companies, the initiation of several clinical
trial management contracts, and the impact of the availability of the
Company's new LC/MS/MS technology. Third quarter 1998 revenues did not
meet expectations as a result of delays and cancellations by clients of
certain studies because of delays in their drug development program
unrelated to the Company. While this situation is not atypical for the
Company's business, a renewed focus has been placed on the development of
new business and on generating new business opportunities with our French
partner, Aster.Cephac.
The Company's gross profit decreased 28.6% to $404,581 for the three
month period ended March 31, 1998 and increased 34.2% to $2,479,657 for
the nine month period ended March 31, 1998, compared to $566,946 and
$1,848,346, respectively, for the same periods of the prior year. Gross
profit as a percentage of revenue decreased to 14.9% and 26.1% for the
three and nine month periods ended March 31, 1998, compared to 24.2% and
26.3%, respectively, for the same periods of the prior year. The
decrease in gross margin for the three month period ended March 31, 1998,
reflects the fact that the Company's fixed costs, related to employee
salaries and other operating expenses, increased both to meet the level
of demand for the Company's services in the first two quarters of the
current fiscal year and to accommodate future planned growth. Staffing
and costs remained at similar levels as revenues decreased in the third
quarter, compared to the first two quarters of fiscal 1998, and license
fee income declined. While license fee revenues were down 60.9% for the
three month period ended March 31, 1998, due to the cessation of the
Company's first license fee agreement in October 1997, and a decline in
license fees from the Sucralfate product due to increased price
competition, license fee revenue for the nine month period ended March
31, 1998, increased 4.4%.
Selling, general and administrative expenses of $493,540 and
$1,724,230 for the three and nine month periods ended March 31, 1998,
increased 1.2% and 11.1%, respectively, compared to $487,489 and
$1,551,668, for the same periods of the prior year. The increase is
primarily attributable to the establishment of an allowance for doubtful
accounts at December 31, 1997, which had the effect of increasing
selling, general and administrative expenses for the nine month period
</PAGE> -9-
<PAGE>10
ended March 31, 1998, by $300,000, notwithstanding a decrease in
expenditures associated with certain vacancies during the 1998 period for
which the Company has recently engaged personnel.
Research and development expenses of $140,226 and $382,516 for the
three and nine month periods ended March 31, 1998, increased 31.5% and
19.1%, respectively, compared to $106,667 and $321,307 for the same
periods of the prior year, due to increased efforts in the Company's
research and development group related to its LC/MS/MS instrumentation.
In September 1997, the Company acquired its second LC/MS/MS instrument
for its laboratory and has invested in research and development to bring
the instrument on-line and to develop methods for utilization in future
studies. The Company believes that these investments will result in the
generation of new business and an improvement in its competitive
position.
Net earnings have been adjusted for the accretion of a preferred
stock dividend to the Purchasers, resulting in a net loss applicable to
common stockholders. The dividend was computed based on the excess of
the fair market value of the Company's Common Stock, into which the
Preferred Stock was convertible at the date of issue, over the purchase
price of the Preferred Stock. The dividend was recorded for financial
reporting purposes only and was not paid to the Preferred Stockholders.
No provision for income taxes has been recorded. The Company has
available unused operating loss and business tax credit carryforwards,
the benefit of which is reduced by full valuation allowance.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary source of funds has historically been funds
generated from operations. However, on December 23, 1997, the Company
concluded a transaction in which it sold Class A Convertible Preferred
Stock and Warrants to purchase Common Stock for $5,000,000 in cash, less
$254,113 in transaction costs. The increase in the cash balances of the
Company of $3,904,106 at March 31, 1998, is attributable to the sale
of the Preferred Stock and the Warrants and the generation of funds from
operations, offset by payments on long-term debt and lease obligations
and funds used to acquire equipment.
At March 31, 1998, the Company had available $3,904,106 in
current operating cash to meet the needs of its business. The Company
also continues to have available a $500,000 line of credit through its
primary secured lender, which was unused as of March 31, 1998. Terms
of the Company's line of credit include advances against eligible
receivables and interest at the Bank's prime rate of interest.
On February 5, 1998, the Company elected to pay
the remaining principal balance on its term note payable to the bank in
the amount of $1,622,381, thereby eliminating its bank debt.
</PAGE> -10-
<PAGE>11
At March 31, 1998, the Company reported an increase in its
contracts in process account which represents costs incurred for studies
for which revenues have not been recognized and which are currently
underway. Deposits on contracts in process have also increased
indicating an increase in prepayments on contracted studies. Changes in
these account balances affect the Company's operating cash flow.
The Company entered into a capital lease for its second state-of-
the-art laboratory instrument, a LC/MS/MS, which was delivered to the
Company in September 1997. Terms of the lease include an original
instrument cost of $340,165, 44 monthly payments of approximately $8,200
and an end-of-lease term option to retain or return the instrument.
CAUTIONARY STATEMENT
In addition to the historical information contained herein, the
discussion in this report contains certain forward-looking statements
that involve risks and uncertainties, such as statements of the Company's
plans, objectives, expectations and intentions. The cautionary
statements made in this report should be read as being applicable to all
related forward-looking statements wherever they appear in this report.
The Company's actual results could differ materially from those discussed
herein. Factors that could cause or contribute to such differences
include, but are not limited to, general economic conditions, conditions
affecting the pharmaceutical industry and the generic drug industry in
particular, and consolidation resulting in increased competition within
the Company's market.
PART II. OTHER INFORMATION
ITEM 2. Changes in Securities and Use of Proceeds
(a) On April 6, 1998, the Company's stockholders approved a five-to-
one reverse split of the Company's Common Stock, the change of authorized
shares of the Company's Common Stock to 10,000,000 shares, par value
$.005 per share, and the reduction of capital for payment of fractional
shares and amendment of the Company's Charter in connection therewith.
The reverse split, which became effective at the close of business on
April 17, 1998, did not affect the rights and privileges of holders of
Common Stock, either before or after the reverse split. The Company had
2,442,654 and 2,439,129 shares outstanding at March 31, 1998 and 1997,
respectively, giving effect to the reverse stock split as though it had
occurred as of each such date. The Company will not issue fractional
shares as a result of the split, and each fraction of a share will be
exchanged for cash. The Company's capital will be reduced by the amount
of cash paid for fractional shares, the total payment of which is
not expected to be material.
(b) Not Applicable.
(c) Not Applicable.
(d) Not Applicable.
</PAGE> -11-
<PAGE>12
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 27: Financial Data Schedule
(b) Reports on Form 8-K
On January 7, 1998, the Company filed a Report on Form 8-K stating
that the Company had received the proceeds of the sale to investors
including certain affiliates of Aster.Cephac, S.A. and CAI Advisors & Co.
(collectively, the "Purchasers") of (i) 833,300 shares of a newly created
Class A Convertible Preferred Stock and (ii) warrants to purchase
1,250,000 shares of the Registrant's common stock, $0.005 par value per
share and had entered into a Registration Rights Agreement and Technology
Sharing Agreement in connection therewith. The securities were sold for
an aggregate purchase price of $5,000,000 in a private placement pursuant
to a Preferred Share and Warrant Purchase Agreement dated December 4,
1997. The Purchasers beneficially own approximately 41% of the Company's
voting securities without giving effect to the possible exercise of
Warrants or approximately 54% of the Company's voting securities if all
warrants are exercised. Such percentage ownership is calculated on the
basis of shares outstanding and does not give effect to the possible
exercise of outstanding stock options.
-12-
</PAGE>
<PAGE>13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PHARMAKINETICS LABORATORIES, INC.
Registrant
May 15, 1998 /s/James K. Leslie
- ----------------- ------------------
Date James K. Leslie
Chief Executive Officer
and President
May 15, 1998 /s/Taryn L. Kunkel
- ----------------- ------------------
Date Taryn L. Kunkel
Vice-President and
Chief Financial Officer
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</PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
SEC Form 10-Q and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> MAR-31-1998
<CASH> 3,904,106
<SECURITIES> 0
<RECEIVABLES> 1,551,721
<ALLOWANCES> 300,000
<INVENTORY> 562,670
<CURRENT-ASSETS> 5,964,157
<PP&E> 5,987,236
<DEPRECIATION> 2,105,705
<TOTAL-ASSETS> 9,939,621
<CURRENT-LIABILITIES> 2,141,983
<BONDS> 0
<COMMON> 12,213
0
4,937,500
<OTHER-SE> 2,589,039
<TOTAL-LIABILITY-AND-EQUITY> 9,939,621
<SALES> 9,509,555
<TOTAL-REVENUES> 9,603,320
<CGS> 7,029,898
<TOTAL-COSTS> 9,136,644
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 120,039
<INCOME-PRETAX> 346,637
<INCOME-TAX> 0
<INCOME-CONTINUING> 346,637
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (674,156)
<EPS-PRIMARY> (.28)
<EPS-DILUTED> (.28)
</TABLE>
